What is Nomination in Demat Account? How to Add Nominee in India
Nomination is the process of designating a person who will receive your shares and securities in the event of your death. The nominee becomes the person legally entitled to claim the holdings from your demat account without the need for complex legal proceedings. SEBI has made nomination mandatory for all demat accounts.
Think of a nominee as the person you name on your insurance policy. If something happens to you, that named person can claim the policy proceeds without a court order. Nomination in a demat account works the same way. Your nominee can claim your shares by submitting the death certificate and relevant documents to the depository participant.
Why Did SEBI Make Nomination Mandatory?
Lakhs of demat accounts in India had no nominee, which created massive problems when account holders passed away. Families had to go through lengthy legal processes involving succession certificates, probate, and court orders just to access the deceased person's shares. SEBI made nomination mandatory to simplify this and protect investor families.
How to Add a Nominee to Your Demat Account?
You can add up to three nominees to a single demat account, with the option to specify the percentage share for each. The process is available online through most broker platforms. You need the nominee's name, Aadhaar or PAN, date of birth, and relationship with you.
If the nominee is a minor, you must also appoint a guardian who will manage the holdings on the minor's behalf until they turn 18. Add your nominee through Stockk at stockk.trade.
Investments in securities market are subject to market risks. This article is for educational purposes only.
Frequently Asked Questions
Is nominee the same as legal heir?
Not always. A nominee is a custodian who receives the securities on behalf of the legal heirs. In Indian law, the nominee holds the assets in trust for the legal heirs as determined by the applicable succession law. If there is a will, the will overrides the nomination. Nomination simplifies the immediate transfer process but does not replace inheritance law.
Can I change my nominee after setting one?
Yes. You can change or update your nominee at any time through your broker's platform or by submitting a nomination change form to your DP. There is no limit on how many times you can change the nominee. Always keep your nomination current, especially after major life events like marriage or the birth of a child.
What happens if I do not have a nominee and I pass away?
Your legal heirs will need to obtain a succession certificate or probate of will from a court, submit it to the DP along with the death certificate, and claim the holdings. This process can take months or even years depending on the legal complexities involved. Having a nominee avoids this delay entirely.
Can I nominate someone who is not a family member?
Yes. You can nominate any person, regardless of their relationship with you. There is no requirement that the nominee must be a family member. However, the legal heirs can contest the nomination if there is a dispute over the estate.
What if my nominee also passes away before me?
If your nominee predeceases you and you have not updated the nomination, the account will be treated as if there is no nominee. Your legal heirs will then need to go through the legal succession process. This is why periodic review of your nomination is important.
Investments in securities market are subject to market risks. This article is for educational purposes only and does not constitute investment advice.
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